VOL. 7 | NO. 49 | Saturday, November 29, 2014
’Tis the Season
By Amos Maki
After the recession struck, desperate retailers competing for a shrinking amount of shopping dollars and market share began tinkering with time-tested holiday marketing strategies.
Good prices, great values, unique offerings and convenience no longer were enough to boost retail sales.
So retailers responded by moving up Black Friday sales and then extended the bargain-shopping period through the Thanksgiving weekend, all the way to Cyber Monday.
The "new normal" in the shopping season, with retailers taking advantage of an extended discount period and longer store hours, seems here to stay.
(Memphis News/Andrew J. Breig)
Even though the economy has improved significantly from the depths of the recession, the “new normal” in the holiday shopping season – an extended discount period and longer store hours – looks like it is here to stay.
“They start the Black Friday sales now,” said Shawn Massey of The Shopping Center Group LLC a week before Thanksgiving. “You’re going to see even bigger discounts and you’re going to see longer hours for most major retailers. It’s going to be great for consumers.”
And consumers are expected to respond by spending more this year than they did last year, fueling retailers’ hopes that they’ll enjoy a green holiday season.
The average consumer buying for the holiday season is expected to spend $804.42 this year, nearly 5 percent more than last year's average of $767.27, according to the National Retail Federation.
NRF said retail spending as a whole will be up 4.1 percent this year to a total of $616.9 billion, the first time since 2011 that holiday sales growth will be higher than 4 percent.
Dr. John Gnuschke, director of the Sparks Bureau of Business and Economic Research and co-director of Center for Real Estate Research at the University of Memphis, said falling gas prices and increased confidence in the economy in 2015 should translate into more holiday shopping this year.
“Instead of spending $80 to fill up the car, they’re spending $50, and I think that’s good news because people will have more money to spend,” said Gnuschke. “People have more confidence about the economy in 2015, and as long as they’re comfortable with 2015, they’ll spend more money this year. Overall, I think the holiday season should be robust.”
Underscoring the importance of the holiday season to retailers, the NRF expects November and December buying to contribute 19.2 percent of the industry's $3.2 trillion in total annual sales.
“This time of year is Christmas for the retailers,” said Brian Whaley of CB Richard Ellis Memphis. “This is where they tend to get their profits, so it’s a huge deal for them.”
Longer Black Friday sales have local shoppers spending more time in stores before Thanksgiving, battling an increase in online shoppers.
(Memphis News/Andrew J. Breig)
Shoppers, still mindful of their pocketbooks, will be searching for bargains. Around 62 percent of NRF survey respondents said they plan to spend more in discount stores such as Wal-Mart or Big Lots.
Roughly 41 percent of survey respondents said the economy would impact how much they plan on spending, which is down around 20 percent from last year and the lowest percentage since 2009, a sign that consumer confidence has improved, albeit slowly.
“While expectations for sales growth are upbeat, it goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions,” said NRF president and CEO Matthew Shay, in a statement. “The lagging economic recovery, though improving, is still top of mind for many Americans.”
“Recognizing the need to keep household budgets in line, we expect shoppers will be extremely price sensitive as they have been for quite some time,” said Shay. “Retailers will respond by differentiating themselves and touting price, value and exclusivity.”
Open (Early) For Business
On Nov. 12, Wal-Mart, the nation’s largest retailer, announced the schedule for what it called the “New Black Friday,” taking the busiest shopping day of the season and extending it over several days.
Five days of discount deals launch online Thanksgiving morning and lead into the store’s first event at 6 p.m. before ending on Monday, Dec. 1.
“Black Friday is no longer about waking up at the crack of dawn to stand in long lines and hope for the best,” said Duncan Mac Naughton, chief merchandising officer for Wal-Mart, in a statement. “This year, we’re blowing it out with five days of deals in store and online.”
Kmart, J.C. Penney and Toys R Us, among others, will also open their doors on Thanksgiving.
“I think you’re going to see most of the major retailers open Thanksgiving evening and Thanksgiving, and you’re going to see longer hours for some retailers,” said Massey. “Some of those sales you can get on Monday or Tuesday that week.”
While some companies are generating buzz and responding to consumer demands by opening on Thanksgiving Day, others are looking to promote their brand – or avoid the “War on Thanksgiving” tag – by resisting early openings on Thursday.
For instance, at Costco, Black Friday sales won’t begin until, wait for it, Friday, Nov. 28. Macy’s, Marshalls, Barnes & Noble, GameStop and T.J. Maxx, among others, also plan on waiting until Friday to open this year.
“Most of the major retailers will be launching sales early and opening on Thanksgiving, but there is beginning to be some pushback,” said Massey.
Simon Property Group, owner of Oak Court Mall and Wolfchase Galleria, wants to have it both ways, opening from 6 p.m. to 1 a.m. on Thanksgiving and 6 a.m. to 10 p.m. on Black Friday. Each center will also have extra “festive” hours throughout the month of December. Last year, Oak Court Mall and Wolfchase Galleria both opened at midnight on Black Friday and remained open until 9 p.m.
“Convenience is key to successful holiday shopping whether you start early or late in the season,” said Brent Gardner, area general manager for Wolfchase Galleria and Oak Court Mall. “We are offering extra holiday hours at both centers to meet our customers’ needs – from the person looking for the latest fashion and styles of the season to the family hunting for great deals or for the last-minute shopper in search of the perfect gift.”
Local, Local, Local
According to the NRF, around 27 percent of holiday shoppers will patronize smaller, local businesses, which is holly jolly news to Cara Greenstein.
Greenstein’s blog, Caramelized (caramelizedblog.com), and retail concept City & State are sponsoring the Memphis Indie Holiday Market at Muddy’s Grind House on Dec. 13. Nearly two dozen retailers, artists, designers and makers will have booths at the one-day market.
“I see it as a celebration of the talent around our city,” said Greenstein. “I think it’s going to be a showcase of the best of the best. In a one-stop shop, shoppers will be given an opportunity to discover and support this great local talent.”
Loeb Properties will be promoting Small Business Saturday, to be held Nov. 29. Loeb will also host a Maker’s Market pop-up shop on Trimble during the holiday season and will hold a holiday tree-lighting event, with a wide variety of activities hosted by Overton Square’s retailers, on Dec. 4.
Memphis small businesses, including Dinstuhl's in Laurelwood where shoppers can find these chocolate suckers, are hoping an expected growth in national retail sales this holiday season will be seen locally as well.
(Memphis News/Andrew J. Breig)
Loeb marketing director Mary Caywood said Overton Square offers an immersive, interactive shopping experience not found at most major retailers, one where shoppers can get a whiff of pretzels fresh out of the oven at Schweinehaus or hear children’s choirs perform.
“The Overton Square brand is a rich, experiential brand that is rooted in the Midtown community,” said Caywood. “It has a great deal of heritage, but you also see, feel and take in the energy it has to offer.”
Rebecca W. Dinstuhl, president of Dinstuhl’s Fine Candy Co. Inc., said she likes to create a unique environment for shoppers, and this year that includes a gingerbread train set.
“We’re always looking for neat and fun things to make holidays special for all our customers,” said Dinstuhl.
Massey said events put on by local retailers can still provide meaningful experiences for shoppers, ones that hearken back to days gone by and provide a much different shopping experience than the big-box rush on Black Friday.
“Pop-up shops are providing a social experience for shoppers,” said Massey. “It’s fun to go into those pop-up shops or go to local retailers because they’re different and they work on a social, emotional level.”
E (as in Easy) Commerce
According to the NRF, shoppers plan to do more than 44 percent of their shopping online.
The surge in online shopping is providing a boost to shippers like Memphis-based FedEx and rival United Parcel Service.
According to FedEx, last year the company handled 275 million shipments between Thanksgiving and Christmas, and it expects volume this year to rise to 290 million shipments, an 8 percent increase from 2013. It expects its peak day to fall Dec. 15.
UPS is anticipating some 585 million packages, an 11 percent uptick from 2013. The company said it expects its busiest day to be Dec. 22.
While boosting parcel delivery companies, the steady rise in online shopping has caused some concern over the future of brick-and-mortar retail stores, but Massey said retailers are increasingly using their online presence to drive shoppers to stores and their stores to drive people online. This holiday season, Massey said he expects more shoppers to visit physical stores to get a look at merchandise and then make purchases online, which he referred to as “showrooming.”
“There’s a confluence now between the bricks-and-mortar and online,” said Massey.
“You’re going to see people walk into stores to check out products and then look on their phones to see if they can get it cheaper and have it delivered,” said Massey. “If people want to walk into stores and check things out – people still like to explore things in person – and then order it online, as long as it comes from their site, they’re OK with it.”
Wal-Mart is taking it one step further, announcing it will match the online price for an item at Amazon, Best Buy, Toys R Us and other online retailers.
“Bricks-and-mortar is not dead; it’s just changing,” said Massey.